| dc.description.abstract | The Lehane matter wound its way through the Cape Provincial Division of the High Court
and reached the Supreme Court of Appeal. Mr Dunne, the Irish debtor who had taken up
residence in the United States of America, ran an international web of companies,
including Lagoon Beach Hotel, which operated a Cape Town hotel. He filed for chapter 7
bankruptcy in the United States and soon was also bankrupted by the Irish High Court.
The Irish official assignee, Lehane, applied to the Cape court for recognition and
assistance, and succeeded at every stage of the South African proceedings.
Initially, Steyn J recognised Lehane as the foreign trustee as though a sequestration order
had been granted against Mr Dunne in terms of the Insolvency Act 24 of 1936, thus
diverging from the approach taken by the Judicial Committee of the Privy Council in
Singularis Holdings Ltd v PricewaterhouseCoopers (Bermuda). Subsequently, Yekiso J's
approach to applying the Insolvency Act without derogating from its generality opens up
the possibility of applying section 21 of the Insolvency Act to significant effect against Mrs
Dunne's South African property. Yet the territorialist restriction in Yekiso J's order that only
creditors with causes of action which arose in South Africa were entitled to claim against
the insolvent estate excluded many foreign creditors, even those from the Republic of
Ireland (Eire).
Of the many issues raised by the Lagoon Beach Hotel company, two chosen for discussion
in this case note are the possible application of the automatic stay under section 362 of
the United States Bankruptcy Code 1978 to the South African proceedings, and the
standing of Lehane because of the litigants' dispute whether Mr Dunne was domiciled in
the United States or Ireland.
Yekiso J and subsequently Leach JA held that the American automatic stay did not govern
the South African proceedings. Significantly, the American and the Irish trustees were cooperating
with respect to proceedings in Ireland and South Africa that involved Mr Dunne.
And Leach JA deftly deferred to the Irish court the decision regarding the application of
the American automatic stay and its relevance to the Irish proceedings.
As for the disputed domicile of Mr Dunne, Yekiso J and Leach JA both considered that Mr
Dunne had retained his Irish domicile. Leach JA, though, went on to discuss the assistance
that might cautiously be accorded to Lehane if Mr Dunne were domiciled elsewhere than
in Ireland. Even then, the relevance of domicile could not be gainsaid. Comparison with
the relevant judgments of the Irish courts shows that they also regarded Mr Dunne as
having retained his Irish domicile and not having acquired a new domicile of choice in the
United States.
In the comments, it is pointed out that trustees appointed in countries other than the
insolvent's domicile may still be recognised by South African courts. The insolvent's
submitting to the jurisdiction of a court that is not the court of his domicile is discussed; on
its facts, the cited authority does not bear out the relevant principle. Further, the possibility
of recognising non-domiciliary trustees in exceptional circumstances and for exceptional
convenience is explored. The cases cited in support of this principle are shown to yield
differing results. | en_US |
